Total Compensation Statements Reflect an Employee’s True Compensation by Mike Bourne
Total compensation statements may help your employees better understand the quality – and the cost – of the benefits you provide as part of a full employment package.
Has anyone in your organization ever asked, “Why are our employees leaving for $1 more per hour?” Most employees see their compensation as only their hourly wage or annual salary when it is so much more. This misperception is partly their employers’ fault since too many companies fail to talk to their workers about the total value of the compensation they receive. This passive approach is hard to understand when we all know that replacing employees is an expensive and time-consuming process. With unemployment at around 4%, labor markets are very competitive in most sectors. There’s no better method to start “marketing” to your employees about the total compensation they receive than giving them Total Compensation Statements.
What are Total Compensation Statements?
Total Compensation Statements (TCS) are summaries of an employee’s cash compensation plus the value of all other benefits received. In addition to listing the base salary and wage, TCS should include these items, as applicable:
- Bonuses and/or Commissions paid
- Paid Time Off (vacation and sick days allowed for the year)
- Include other paid leaves (such as, maternity, paternity, and adoption) that were taken during the year. If not taken in the given year, then these should be footnoted at the bottom of the TCS as a reminder of the availability of these generous benefits.
- Payroll “Taxes” – Workers’ Compensation, Social Security, Medicare, and FUTA that are paid by the employer
- These won’t differentiate your company from a competitor, but it might make employees think about these costs before starting their own company.
- Insurance Premiums (health, dental, vision, life, STD, and LTD) paid by the employer
- Employer Contributions to 401(k), 403(b), or pension plans, and to FSAs or HSAs
- Value of other benefits, such as:
- Stock Options
- Tuition assistance
- Employee Assistance Programs (EAP)
- Gym membership or other company wellness programs
- Company-provided lunches
- Public transportation and parking subsidies
- Company car or vehicle reimbursement
- Mobile phone reimbursement
- Company discount programs
- On-site childcare
- Continuing education programs or reimbursements
A TCS is like selling your company to your employees by positioning your company as an employer of choice, so approach your TCS with your marketing hat on. The TCS should grab employees’ attention, and should be clear and concise, using language they easily understand, and only graphics that aid in absorbing the information. (Avoid the multi-category pie chart, which tends to make some of the benefits look tiny. Instead, consider a two-category pie chart that shows how much the non-cash compensation is in relation to the cash compensation. That ratio might surprise your employees.) Also, think through the delivery of the information. Should employees’ Total Compensation Statements be mailed to the home, sent via email, put on the company portal, or delivered by hand by their immediate supervisor?
There are numerous examples and templates for Total Compensation Statements on the internet, so start googling. Also, some payroll companies and professional employer organizations (PEOs) have their own templates for their clients’ use.
There is no better time than the present to make certain your employees fully understand your company’s entire investment in them. Providing your employees with Total Compensation Statements should help increase both employee engagement and retention. At the very least, Total Compensation Statements will allow your employees to make a fully informed decision about the value of benefits your company offers before they jump to another company for minor increases in their cash compensation.
Mike Bourne, Atessa Benefits
Versatile Senior Executive with a proven track record as COO and CFO in several industries, including aerospace & defense, manufacturing, financial services, recreation, and leisure. A roll-up-your-sleeves strategic leader who optimizes people, processes and profits. Exceptional communicator, in both words and actions, who builds and leads teams that achieve remarkable results.
